Senators reintroduce bill to exempt broadband grants from taxation

US Senators Mark Warner (D-VA) and Jerry Moran (R-KS) on Thursday reintroduced the Broadband Grant Tax Treatment Act: a piece of legislation that would exempt broadband grants from the Infrastructure Investment and Jobs Act, American Rescue Plan and Tribal Broadband Connectivity Fund from being treated as taxable income.

The bill was first introduced last year, under a different Congress, with bipartisan support in the House and Senate. While it still has bipartisan support, its future is slightly less certain with Republicans in charge of the House, given that the law is being created to undo a tax law change that took effect with the 2017 Tax Cuts and Jobs Act, signed by former President Donald Trump.

Still, passing the law is a high priority for Internet service providers (ISPs) hoping to participate in the $42.5 billion Broadband, Equity, Access and Deployment (BEAD) program.

Last year, several industry groups including USTelecom, CTIA, NTCA–The Rural Broadband Association and others sent a letter to Congress warning that, under current tax law, broadband providers will be required to return “as much as 21 percent” of their grants, leaving “millions of Americans without access to the broadband they were promised.”

The Broadband Grant Tax Treatment Act would fix that.

According to the legislative text, the new law would mandate that “[g]ross income shall not include any qualified broadband grant made for purposes of broadband deployment.” Further, should the law pass in its current state, it would apply retroactively “to amounts received in taxable years ending after March 11, 2021.”

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